How can food aid be more effective?

19 June 2012

If food aid is to be more effective donors need to consider both the goals of the aid, and its economic implications.

In May 2012, shortly before the annual G8 summit, the Obama administration announced the ‘New Alliance for Food Security’. The project enlists 45 private companies who are to invest in food production in some of the world's poorest countries.

The availability and affordability of food in developing countries is a constant concern and malnutrition causes the death of around 2.6 million children a year. In the wake of the food crisis of 2007-08 many donors made a renewed commitment to food security. If projects such as the ‘New Alliance for Food Security’ and interventions by bilateral and multilateral donors are to be successful careful attention must be paid a number of issues surrounding their implementation. In his UNU-WIDER working paper, 'Foreign Assistance and the Food Crisis of 2007-2008', Phillip Abbott addresses this issue of implementation and highlights a number of key problems that policy makers need to keep in mind when designing and administering projects aimed at mitigating the effects of the food crisis.

The goals of food aid

Draft papers published before the May 2012 G8 summit confirmed the groups’ commitment to addressing food security and outlined its goals as ‘improving agricultural productivity, economic growth, food security and nutritional status’. While these aims are all admirable in their own right, careful attention needs to be paid to cases where these different objectives may conflict.

In the literature on aid it is generally presumed that economic growth is the appropriate measure of development effectiveness of aid. However, as Abbott points out, the goals of food aid are generally humanitarian in nature. Investment in agricultural production may not be optimal in terms of maximizing growth, but it is likely that any growth that does occur as a result of such an investment will be more equitable and lead to a reduction in poverty.

However, if too much attention is given to humanitarian goals the resulting policy reach can be short-term in nature. During the recent food crisis aid for the short-term solutions of providing food transfers and cash safety-nets probably exceeded longer term investment in agricultural production. In fact even investment in agricultural production was short term in nature, focused on importing fertilizer and seeds rather than agricultural research or institutional development. Abbott argues that if long term food security is to be achieved there needs to be a careful balance between the multiple objectives of donors.

A related issue is the disagreement that may exist between donors and recipients about the proper goals of aid to enhance food security. In the wake of the food crisis donors wanted to focus largely on developing the capacity of small farmers and alleviating extreme poverty. Recipient national governments however were more focused on mitigating the consequences for much larger sections of their population and less worried about agricultural development. Evidence clearly shows that agricultural projects succeed more frequently when donors and recipients are aligned; therefore, Abbott suggests, if aid to enhance food security is to be successful greater care must be taken to ensure this is the case.

One final issue that needs to be considered with regard to the goals food aid is the effect climate change will have on agricultural production. Abbott points out that attention needs to be paid both to how agricultural production can adapt to the effects of climate change and to how agricultural production can develop in a sustainable manner. Donors need to ensure that any agricultural research they support takes into consideration the effect climate change is likely to have on the future of agricultural in that area.

The economics of food aid

The UN high level task force on food security estimates that forty billion dollars a year would need to be invested in order for agricultural production to grow fast enough to meet the world’s food needs. Foreign assistance barely makes a dent in this need and thus projects like the ‘New alliance for Food Security’, which attempt to leverage private sector investment, have the right idea (the success of this particular project remains to be seen). We are still a long way off the forty billion mark and agriculture is, largely, a private sector industry. Subsequently, Abbott argues, that donors investing in agricultural development must take into consideration the effect their projects have on private sector investment.

A related issue concerns whether meeting future world food needs requires a supply or a demand-side solution. Demand for food, in the sense of people needing it, is clearly not a problem, however in the past malnutrition has persisted despite excess global food production. The problem then is creating effective demand. Abbott suggests that agricultural aid can help achieve this by helping to increase rural income and employment and thereby reducing poverty. This will create an increase in food demand which should stimulate a supply-side response.

Finally, Abbott argues, it is important not to let a general scepticism about aid effectiveness, or particular debates about delivery mechanisms diminish support for agricultural development more than it already has. Those who advocate increased international support must present a more united front to donors. Debate is both inevitable and essential but a more systematic economic evaluation of the various alternatives, sensitive to their environmental consequences, would lead to more productive and less divisive dialogue.

There are then multiple issues that donors, as well as analysts, must consider when thinking about the role foreign assistance can play in fostering food security. If performance in the areas discussed above can be improved, food aid and agricultural development assistance will become more effective. Abbott posits that if this is achieved it will help alleviate poverty, bring more equitable income distribution and fight malnutrition.